JLT Systems JLT Systems sells and installs a firewall program to protect mobile apps from hacking an e-tailer's servers. Each sale and installation requires JLT to incur a variable cost to sell and install the JLT firewall. JLT has a linear cost structure meaning that JLT has a fixed cost each month and a variable cost per sale and installation that does not vary with the number of sales and installs. At 200 sales and installs per month, JLT's average cost is $2,700 per sale and install. JLT incurs fixed costs of $400,000 per month.

Required:

a. What is JLT's variable cost per sale and install?

b. JLT Systems sets the price for its firewall software at the market price of $2000. JLT Systems wants to show an aftertax profit of $18,000 per month and has an income tax rate of 20%. How many sales and installs per month does JLT need to make to achieve its after tax profit goals?

c. Instead of being a price taker as in part (b), now assume that JLT faces the following demand schedule:

QuantityPrice250$ 2,100.00275$ 2,050.00300$ 2,000.00325$ 1,950.00350$ 1,900.00375$ 1,850.00400$ 1,800.00425$ 1,750.00450$ 1,700.00475$ 1,650.00500$ 1,600.00525$ 1,550.00550$ 1,500.00

(JLT's demand curve is represented by the equation: P=2600-2 Q)

What is JLT Systems' profit maximizing number of sales and installs of its firewall software per month?